Published in the San Diego Union-Tribune, July 16, 2018
I recently flew cross country and once again watched a movie that changed the early part of my life — Stanley Kubrick’s “2001, A Space Odyssey.” The movie was made 50 years ago and was a seminal event in my choosing to go to film school and “make movies.”
What resonates for me today, still in the trenches of the startup game, and as a coach to a raft of millennial entrepreneurs is that the movie previews for “2001” “were an unmitigated disaster.” Michael Benson writes in the Wall Street Journal that “audience walk-outs numbered well over 200 at the New York premiere on April 3, 1968.” Movie critics panned it, yet the next day a long line “comprised of predominantly young people” extended down Broadway, around the block, awaiting the first matinee.
The movie was considered incomprehensible by prevailing Hollywood standards, (the first words are not spoken until nearly 30 minutes into the film), but it spoke to a counter-culture generation. John Lennon quipped that he saw it every week, and David Bowie recorded his hit single “Space Oddity” a year later.
One of the most famous film critics, Pauline Kael of The New Yorker, waited 10 months to review it and then called it “trash masquerading as art.” Still, it has been listed by the American Film Institute as one of the 100 greatest films of all time.
After that first preview, try to imagine Kubrick walking out into the streets and contemplating complete and utter failure and rejection. Shikhar Ghosh, professor at Harvard Business School, has tried to quantify aspects of failure for the entrepreneur. He says that if you define a failure as liquidating all the assets, “with investors losing all their money,” then the failure rate is 30 to 40 percent. If failure refers to the company “failing to achieve the projected return on investment, then the failure rate is 70-80 percent.” With those odds, it seems you would do better opening a food truck.
One of the keys to avoiding failure is to embrace the infamous “pivot.” Listen to your customer, really understand the problem he has — not the one you think he has. Blasting ahead, unrepentant, simply because you can technically do so is not rational. And so we return to Kubrick and “2001.” After the first preview, they went back to the drawing board and cut 20 minutes to make it more accessible to the general public.
I remain fascinated by the puzzle of building a company. At one of my companies, we recently had a closing dinner, we had raised some money and solved some basic problems, and the mood was enthusiastic amid the wine that night. The next day we had a lengthy management and scientific advisory board meeting where it became vividly apparent that the only thing ahead of us were still more problems — and with vastly more complexity. We had scaled what we thought was a mountain, only to find that it was an ant hill, and the next mountain was right in front of us, looming larger.
I went back to read some words from Josh Kopelman, founder of First Round Capital. He says, “a lot of what we look for (when considering an investment) is understanding the founder’s grit and resilience. Do they really understand the risks they are about to take?” It took Kubrick four years to make “2001,” and of course it was wildly over budget. There appears to be no short cut to the top of the mountain, and Everest is littered with bodies in the ice.
We talk about company failures. What about individual failures? Ghosh suggests that those failures can be valuable learning experiences, and if addressed early enough can prevent the entire organization from cratering. His example is when the top salesman cannot close the deal, then maybe the problem lies not in the person but in the product. “Small setbacks like that can provide the raw material for continuous improvement.” Ghosh cautions us to embrace “little failures,” not bet-the-farm-against-all-odds gambles.
Ironically, the venture investment community often backs founders/entrepreneurs who have had previous failures. They view them as a safer bet, believing that they have learned from the past (George Santayana). I agree, only if they really learned something, and also only if they acted honorably while the ship went down. That is the real measure of character.
Rule No. 568: Man the lifeboats– women and children first.